January 19, 2021
Vedder Price is pleased to announce that Aaron S. Turner has joined the firm as a Shareholder in its Finance & Transactions practice area. Mr. Turner previously practiced at Frost Brown Todd LLC. He will be based in Dallas, Texas.
Mr. Turner represents lenders, lender agents, private equity sponsors, institutional purchasers and public and private corporate borrowers in connection with a broad range of finance transactions, including working capital facilities, acquisition financings, bridge and mezzanine financings, cash flow and asset-based facilities (including subscription-based facilities), first lien/second lien financings, letter of credit facilities, project financings, recapitalization transactions, cross-border facilities and middle-market financings. He has significant experience in the representation of creditors and debtors in workouts and restructurings, including extensive experience with debtor-in-possession and exit financings. His clients span various industries including energy, oil and gas, manufacturing, retail, technology, health care, business services and consumer products.
“We look forward to bringing Aaron’s extensive finance knowledge and impressive middle market experience to our lender and borrower clients,” said Michael A. Nemeroff, President and CEO of Vedder Price. Noting Mr. Turner’s role as the lead finance attorney on one of the ten largest bankruptcies in 2017 by debt amount, Mr. Nemeroff added, “I’m thrilled that we continue to attract top talent like Aaron and we are open to other key hires from Dallas or other areas of the country as well.”
“Vedder Price has a sector and market focus that are in perfect alignment with mine,” said Mr. Turner. “Additionally, bringing Vedder’s strong financial presence and highly qualified lawyers to a rapidly growing area with many other market economic factors that demand these services was a fantastic opportunity. I look forward to serving my clients with the backing of my new firm.”
Mr. Turner earned his J.D. from Georgetown University Law Center and his B.B.A. magna cum laude from Texas Christian University.
January 19, 2020
Vedder Price advised Aviation Capital Group LLC (ACG), a leading aircraft asset manager, in connection with its Rule 144A/Regulation S offering of $750 million of 1.950% senior unsecured notes due 2026. ACG intends to use the net proceeds from the notes for general corporate purposes, including repayment of outstanding indebtedness and the purchase of commercial aircraft.
Kevin MacLeod, Shareholder and Head of the New York Capital Markets Group, led the team for Vedder Price, commenting: “We at Vedder Price are proud to have supported ACG on this latest successful 144A capital markets offering.”
In addition to Mr. MacLeod, the Vedder Price team included Capital Markets Shareholder Jennifer King, Tax Shareholder Andrew Falevich, and Associates Amir Heyat and Rebecca Green.
The notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (Securities Act), or the securities laws of any jurisdiction. The notes were offered and sold only to qualified institutional buyers in reliance on Rule 144A under the Securities Act and outside the United States to non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act.
Vedder Price Grows New York Investment Services Practice with Addition of Wayne M. Aaron from Milbank
January 4, 2021
Vedder Price announced today that Wayne M. Aaron has joined the firm as a member of the Investment Services group and Corporate practice area in New York. Mr. Aaron joined from Milbank, where he served as a Partner in the Litigation & Arbitration, Financial Services Regulatory and Technology practices.
An experienced securities regulatory lawyer, Mr. Aaron represents financial services firms, management and other personnel in regulatory and governmental investigations and internal investigations. His varied practice spans financial services advisory matters, broker-dealer regulation and enforcement, government and regulatory investigations, and FinTech.
“Wayne is a terrific addition to our existing broker-dealer and regulatory investigations practices as we look to continue to grow and diversify those practices, including into other complementary areas, such as high frequency trading and FinTech regulatory work,” said Corporate Practice Area Chair Jennifer Durham King. “We look forward to having Wayne on board and to his assistance in growing our financial services and corporate-related practices in New York.”
Mr. Aaron regularly advises securities firms and their employees on complex sales and trading and other regulatory issues affecting the securities markets. He represents clients in examinations and inquiries by, and enforcement proceedings before, the Securities and Exchange Commission and other government regulators and self-regulatory organizations. His practice encompasses a wide-range of regulatory issues currently affecting financial services firms, hedge funds and other institutional investors.
“I’m excited to offer my clients access to Vedder’s resources and platform, and to join a firm with such a collaborative, cross-selling culture,” said Mr. Aaron. “I look forward not only to growing my practice and working with Vedder’s existing clients, but also to working with my new colleagues across many of our practice groups and in New York to deliver best-in-class customer service.”
Mr. Aaron earned his J.D. from Hofstra University School of Law and his B.S. from Tufts University. He began his legal career with Solomon, Zauderer, Ellenhorn, Frischer & Sharp before practicing at Milbank for 17 years.
January 4, 2021
Vedder Price is pleased to announce that the firm’s Investment Services Group has received a 2020 Go-To Thought Leadership award from the National Law Review, its second such award in the past three years, in recognition of the Group’s regular securities law thought leadership contributions and outstanding analysis of issues affecting the asset management industry.
Less than 1% of the authors who publish with the National Law Review receive the Go-To Thought Leadership Award. Vedder Price’s Investment Services Group also received the award in 2018, the first year the National Law Review began formal recognition of the unique talents of its contributors.
The driving force behind the Investment Services Group’s prodigious output of thought leadership is the Investment Services Regulatory Update, a monthly newsletter the Group produces to keep clients updated on relevant regulatory matters. Co-edited by Investment Services attorneys John S. Marten, Jacob C. Tiedt and Nathaniel Segal, the newsletter has featured over 60 articles in the past year covering topics including SEC rulemaking, guidance and alerts, as well as important securities litigation matters and asset management industry-related regulatory enforcement actions and settlements.
In addition to the Investment Services Regulatory Update, the Investment Services Group also published numerous independent articles to its Coronavirus Task Force page this year, helping clients keep abreast of a flurry of important regulatory updates and developments in the asset management industry related to the global coronavirus pandemic.
“We would like to thank the National Law Review for this thought leadership award. This recognition reflects our Group’s combined efforts to closely follow and analyze regulatory developments of importance to our clients and peers.” commented John S. Marten, Co-editor of the Investment Services Regulatory Update.
“Our Investment Services Group attorneys regularly collaborate to publish timely pieces on emerging issues,” Co-editor Nathaniel Segal added. “We look forward to continuing Vedder Price’s strong record of thought leadership regarding legal issues facing the asset management industry in the coming year.”
Click here to subscribe to the Investment Services Regulatory Update via email, as well as other important legal updates from Vedder Price. The latest bulletins from Vedder Price’s Investment Services Group can also be viewed on the firm’s website here.
To view the full list of National Law Review 2020 Go-To Thought Leadership award winners, please click here.
January 19, 2021
Effective January 1, 2021, the National Defense Authorization Act for Fiscal Year 2021 (the “Act”) became law. Among other provisions, the Act contains the most significant changes to the Bank Secrecy Act (the “BSA”) since 2001. Most significantly, the Act requires the Department of the Treasury, through the Financial Crimes Enforcement Network (“FinCEN”), to adopt regulations within one year that will establish a framework by which smaller, closely held businesses, regardless of the type of enterprise (e.g., corporation, limited liability company or partnership) will be required to disclose their beneficial ownership to FinCEN.
What are the new BSA/AML requirements for U.S. corporate entities?
- Each “reporting company” that is formed/registered after the effective date of the forthcoming regulations must, at the time of formation or registration, submit to FinCEN a report that identifies the beneficial owners of the company.
- Each “reporting company” that has been formed/registered before the effective date of the forthcoming regulations must submit to FinCEN a report that identifies the beneficial owners of the company within two years after the effective date.
Will reporting companies be required to update previously reported beneficial ownership information?
Yes. A reporting company will be required to file, no later than one year after the date on which there is a change to any information submitted to FinCEN, a report that updates the company’s beneficial ownership information.
Who is a “reporting company”?
A “reporting company” is defined as meaning any corporation, limited liability company or other similar entity that was either (i) created by the filing of a document with a secretary of state or a similar office or (ii) formed under the law of a foreign country and was registered to do business in the United States by the filing of a document with a secretary of state or a similar office.
Are certain entities exempted from the “reporting company” definition?
Yes. In general, the below entities are exempted from the new registration requirements.
- Any entity that (i) employs more than 20 employees on a full-time basis in the United States, (ii) filed in the previous year federal income tax returns in the United States demonstrating more than $5 million in gross receipts or sales in the aggregate, including the receipts or sales of (a) other entities owned by the entity; and (b) other entities through which the entity operates; and (iii) has an operating presence at a physical office within the United States.
- Any corporation, limited liability company or other similar entity (i) in existence for over one year; (ii) that is not engaged in active business; (iii) that is not owned, directly or indirectly, by a foreign person; (iv) that has not, in the preceding 12-month period, experienced a change in ownership or sent or received funds in an amount greater than $1,000 (including all funds sent to or received from any source through a financial account or accounts in which the entity, or an affiliate of the entity, maintains an interest); and (v) that does not otherwise hold any kind or type of assets, including an ownership interest in any corporation, limited liability company or other similar entity.
- Federal and state chartered banks and credit unions.
- Bank holding companies.
- Money transmitting businesses registered with FinCEN.
- Brokers and dealers registered with the Securities and Exchange Commission (the “SEC”).
- Investment companies and investment advisers registered with the SEC.
- Insurance companies.
- Any registered entity under the Commodity Exchange Act.
- Public utilities.
- Pooled investment vehicles.
- Entities described under Section 501(c) of the Internal Revenue Code (the “IRC”) and exempted from taxation under Section 501(a) of the IRC.
- Federal, state and local government entities.
- Any corporation, limited liability company or other similar entity of which the ownership interests are owned or controlled, directly or indirectly, by one or more entities described above.
In addition, the Department of the Treasury with the concurrence of the Department of Justice and the Department of Homeland Security may exempt any entities from the new registration requirements pursuant to regulation. While the Act gives the Department of the Treasury one year to adopt rules, financial institutions should anticipate that they will be obligated to obtain proof of compliance with the Act as part of their customer due diligence account opening procedures.
Who is a “beneficial owner”?
A “beneficial owner” is defined as meaning an individual who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise (i) exercises substantial control over the entity; or (ii) owns or controls not less than 25% of the ownership interests of the entity.
A beneficial owner does not include the following persons: (i) a minor child, if the information of the parent or guardian of the minor child is reported; (ii) an individual acting as a nominee, intermediary, custodian or agent on behalf of another individual; (iii) an individual acting solely as an employee of an entity and whose control over or economic benefits from such entity is derived solely from the employment status of the person; (iv) an individual whose only interest is through a right of inheritance; or (v) a creditor of an entity, unless the creditor exercises substantial control over the entity through any contract, arrangement, understanding or relationship.
How will the newly reportable information be used?
According to the Act, FinCEN will place the information into a “secure, nonpublic database, using information security methods and techniques that are appropriate to protect nonclassified information systems.” Government authorities, including law enforcement and bank regulators, will have access to the system. A financial institution that is subject to the customer due diligence rules of the BSA will, with the consent of a reporting company, have access to that reporting company’s registration. Once final rules are in place, it seems likely that upon the opening of any account for a business, a financial institution will be required as part of its due diligence to ascertain that the business is registered with FinCEN or that it is entitled to an exemption from the definition of a reporting company.
To view the full text of the Act, click here.
January 13, 2021
On January 6, 2021 and January 8, 2021, respectively, the Small Business Administration (the “SBA”) issued (a) implementing interim rules updating and defining the rules and requirements of the first and second round loans of the Paycheck Protection Program (“PPP”) and (b) the form of PPP loan applications to be used to process such loans. Under the revised PPP, certain borrowers will be eligible to receive either a first draw PPP loan (“PPP First Draw Loan”) or a second draw PPP loan (“PPP Second Draw Loan”), as applicable. Below is a summary of the material updates to the PPP. In addition, please refer to our bulletin, published on December 30, 2020, for additional information on the updated terms and conditions relating to PPP First Draw Loans and PPP Second Draw Loans.
Which borrowers are eligible to obtain a PPP First Draw Loan?
Under the SBA’s interim rules, a borrower that did not previously participate in the PPP may seek to obtain a PPP First Draw Loan. The criteria to obtain a PPP First Draw Loan remains consistent with the criteria previously issued by the SBA in 2020.
We note that the eligibility criteria for obtaining a PPP First Draw Loan are broader than the criteria for PPP Second Draw Loans. As discussed below, the eligibility criteria for PPP Second Draw Loans are more narrowly tailored to limit eligibility for PPP Second Draw Loans to smaller businesses that experienced a significant decrease in revenue.
Which borrowers are eligible to obtain a PPP Second Draw Loan?
To be eligible to obtain a PPP Second Draw Loan, borrowers must (a) have 300 or fewer employees and (b) be able to demonstrate a 25% reduction in its gross receipts (described below).
In calculating its employee headcount, a borrower must count all domestic and foreign employees, including full-time, part-time and temporary employees (i.e., those who receive a W-2). In addition, a borrower must include in this calculation the employees of any entity deemed to be an affiliate of the borrower in accordance with the SBA’s affiliation rules.
If a borrower currently has outstanding a PPP First Draw Loan, can a borrower obtain a PPP Second Draw Loan?
Yes. A borrower will be eligible to receive a PPP Second Draw Loan if (a) the borrower has received a PPP First Draw Loan and (b) has used, or will use, the full amount of the PPP First Draw Loan on or before the expected date on which the PPP Second Draw Loan is disbursed to the borrower. Note that the “full amount” of the PPP First Draw Loan would include any increase under an existing PPP First Draw Loan.
If a borrower has already submitted its PPP First Draw Loan forgiveness application, will the fact that its loan forgiveness application is under review delay or impact a borrower’s eligibility in obtaining a PPP Second Draw Loan?
Maybe. If a PPP First Draw Loan forgiveness application is under SBA review/audit and the SBA is reviewing a borrower’s eligibility in obtaining a PPP First Draw Loan, the SBA will notify the applicable PPP lender that it will not approve a PPP Second Draw Loan until the underlying matter is resolved. The SBA notes that it will seek to resolve such matters expeditiously.
How would an applicant borrower calculate and show the required 25% revenue reduction?
At the applicant borrower’s election, an applicant borrower can use either of the following comparative periods:
- Quarterly – A borrower may compare any quarter in 2020 to the same quarterly period in 2019 to demonstrate at least a 25% reduction in the borrower’s gross receipts during the applicable quarterly period. For example, a borrower would use a comparison of the Second Quarter of 2020 to the Second Quarter in 2019 if such comparison showed a 25% or greater reduction in gross receipts.
- Annually – A borrower that was in operation in all four quarters of 2019 may compare 2020 on an annual basis to 2019 on an annual basis if such comparison shows at least a 25% reduction in its gross receipts on an annual basis. We note that, to take advantage of this option, the borrower would be required to submit copies of its 2020 and 2019 annual tax forms substantiating the revenue decline.
How are “gross receipts” calculated?
The SBA has clarified that “gross receipts” will be defined in a manner consistent with 13 CFR 121.104. In general, under that provision, gross receipts are defined as meaning “total income,” which would include “all revenue in whatever form received or accrued from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances.” Gross receipts would not include “net capital gains or losses, taxes collected for and remitted to a taxing authority if included in gross or total income, such as sales or other taxes collected from customers and excluding taxes levied on the concern or its employees; [and] proceeds from transactions between a concern and its domestic or foreign affiliates.”
We note that any loan forgiveness obtained on a PPP First Draw Loan would not be included in gross receipts.
What are the loan terms for PPP Second Draw Loans?
PPP SECOND DRAW LOAN TERMS Interest Rate 1.00% (non-compounding, non-adjustable basis) Maturity 5 years 5 years SBA Guarantee 100% Collateral Requirement None Personal Guarantee Requirement None
How is the loan amount of a PPP Second Draw Loan determined?
In general, borrowers are eligible to receive an amount equal to 2.5x the borrower’s average monthly payroll for U.S.-based employees only, capped at $2 million. However, borrowers that are assigned a North American Industry Classification System (NAICS) code of 72 (Accommodation and Food Service) are eligible to receive an amount equal to 3.5x the borrower’s average monthly payroll, capped at $2 million.
We note that a borrower that is a part of a single corporate group that receives more than one PPP Second Draw Loan will be limited to $4 million in the aggregate.
How does a lender/borrower calculate the “average monthly payroll” of an applicant borrower for both PPP First Draw Loans and PPP Second Draw Loans?
BORROWER TYPE CALCULATION Borrowers At the option of the borrower, use the average monthly payroll for 2019 or 2020, excluding costs over $100,000 on an annualized basis, for each employee. Borrowers, other than self-employed, sole proprietorship or independent contractor borrowers, may also elect to use the average monthly payroll for the precise one-year period prior to loan disbursement. Seasonal Borrowers At the option of the borrower, the borrower may elect to use either (a) the average monthly payroll for 2019 or 2020 or (b) the average total monthly payroll for any 12-week period selected by the borrower between February 15, 2019 and February 15, 2020, in each case excluding costs over $100,000 on an annualized basis, for each employee. New Business Borrowers PPP First Draw Loans – For new businesses, average monthly payroll are to be calculated using the time period from January 1, 2020 to February 29, 2020, excluding costs over $100,000 on an annualized basis for each employee.
PPP Second Draw Loans – For those borrowers without 12 months of payroll costs, but that were in operation as of February 15, 2020, average monthly payroll may be calculated based on the number of months in which payroll costs were incurred, excluding costs over $100,000 on an annualized basis for each employee.
Is an applicant borrower still required to certify the economic necessity of the PPP Second Draw Loan?
Yes. Borrowers of both PPP First Draw Loans and PPP Second Draw Loans will again be required to certify that the “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Consistent with the SBA’s previously issued guidance, borrowers should review this certification carefully and adequately document the borrower’s specific circumstances and good faith determination that, at the time of submitting the PPP loan application, the PPP loan is economically necessary, including taking into account the borrower’s current level of business activities and the availability of alternative sources of additional liquidity, if any.
How will loan forgiveness be handled for PPP Second Draw Loans? Has the SBA made any material changes to the loan forgiveness process for PPP Second Draw Loans?
PPP Second Draw Loans will be subject to the same loan forgiveness terms and conditions as PPP First Draw Loans, except that borrowers of PPP Second Draw Loans with a total borrowed amount of less than $150,000 will be subject to more flexible loan forgiveness standards. For PPP Second Draw Loans of $150,000 or less, a borrower will be eligible for loan forgiveness if the borrower signs and submits a one page certification to its PPP lender (a) describing the number of employees the borrower was able to retain because of the PPP loan, the estimated amount spent on eligible payroll costs and total PPP loan value, and (b) attesting that it accurately provided the required certifications and complied with applicable PPP requirements. The form of certification is expected to be available by January 20, 2021.
We note that the SBA has indicated it intends to publish in the near term interim rules summarizing the loan forgiveness requirements and process for PPP First Draw Loans and PPP Second Draw Loans.
Are lenders held to the same PPP rules and requirements in originating PPP Second Draw Loans?
Yes. The interim rules issued by the SBA make clear that lenders are subject to the same requirements when making PPP Second Draw Loans as they are when making PPP First Draw Loans. The SBA states that this treatment will “allow a lender…to use existing program guidance and standard operating procedures to the maximum extent practicable.”
January 14, 2021
Please join James W. Morrissey and Mark C. Svalina of Vedder Price’s Financial Institutions group for an educational webinar on the newly enacted stimulus bill.
Signed into law on December 27, 2020, as part of a larger government funding bill, the stimulus bill:
- restarts the Paycheck Protection Program (“PPP”) and provides borrowers with greater flexibility under the PPP; and
- implements various other bank-specific provisions.
Our webinar discussion will help financial institutions understand the provisions and implications of both the second round of PPP and other relevant provisions in the general stimulus package. We hope you will join us!
To help us better answer your questions, we strongly encourage you to submit confidential questions for the panelists on the registration page or to send your questions directly to Mark C. Svalina at email@example.com. Any question not answered during the event will be answered individually, via email, upon the webinar’s completion.
January 15, 2021
Please join Vedder Price attorneys Joseph M. Mannon and Robert M. Crea, as well as co-panelist Julie Dixon, Founder and CEO of Titan Regulation, for a webinar panel discussion about the new Marketing Rule recently adopted by the U.S. Securities and Exchange Commission.
The new Marketing Rule represents a significant change to how investment advisers can market themselves and their products, including how advisers to private funds such as private equity, venture capital and hedge funds can present their performance information.
During this webinar participants will gain knowledge regarding:
- What qualifies as an “advertisement” under the new Marketing Rule
- Compliance requirements for using testimonials and endorsements in an advertisement
- How advisers may use third-party ratings in an advertisement
- The new Marketing Rule’s provisions regarding the use of performance advertising
- General prohibitions under the new Marketing Rule